Azul’s Bankruptcy Almost Done, Restructuring Approved

A US bankruptcy judge has formally approved Brazilian airline Azul’s Chapter 11 restructuring plan, clearing the way for the company to eliminate more than $2 billion in debt and reorganize its finances.

As part of the approved plan, American Airlines and United Airlines have committed to invest up to $300 million in new equity. Their backing provides both financial support and strategic validation as Azul works to stabilize and rebuild its business.

Why Azul entered bankruptcy

Azul filed for Chapter 11 bankruptcy protection in the US in May 2025 after facing high debt levels, rising fuel costs, currency volatility, and supply chain challenges that affected aircraft availability and operating costs.

Chapter 11 allowed Azul to continue operating flights while renegotiating key financial obligations under court supervision.

Key restructuring efforts

Azul will reduce its total debt by more than $2 billion, significantly improving its financial position. Lease obligations are also being cut by nearly 28 percent, lowering long-term fixed costs and easing pressure on future cash flows.

Additionally, the airline secured pre-arranged restructuring agreements with major creditors, including aircraft lessor AerCap.

In September 2025, Azul announced plans to return an additional 20 aircraft, primarily older first-generation Embraer E195 regional jets, shrinking the fleet by roughly 35 percent.

The airline has already pulled out of more than 15 cities to focus on core markets with stronger demand and better margins.

Positive outlook

Azul plans to exit Chapter 11 by early 2026. Annual interest expenses are expected to fall by about $200 million, freeing up cash for operations, fleet renewal, and selective growth.

The airline continues to negotiate with aircraft lessors, manufacturers, and other stakeholders to finalize long-term fleet and operational plans as it prepares for life after bankruptcy.

Photo by Gleive Marcio Rodrigues de Souza on Unsplash